The terms “card” and “payment card” are used herein to describe a payment card that can be presented by a cardholder to make a payment or that can be used to make a payment in a remote transaction, such as an e-commerce transaction, telephone transaction, or mail order for example. By way of example, and without limiting the generality of the foregoing, the cards described herein can be a credit card, debit card, charge card, stored-value card, or prepaid card. The remote transactions such as e-commerce transactions, telephone transactions and mail order transactions, in which the card is not presented directly to a merchant during the transaction, are referred to herein as card-not-present (“CNP”) transactions.
Generally, payment cards have a “front” and a “back.” In the case of a store card (also known as a private label or closed-loop card), the card front usually has the store name and/or logo and at least an account number and customer name, and the card back usually has at least a bar code or a magnetic stripe that contains account information. In the case of a general-purpose payment card (also known as an open-loop card), the card front generally has the payment brand, an issuer brand, an account number, cardholder name, expiration date, and certain security features (such as a hologram). The card back generally has at least a magnetic stripe and signature panel.
A magnetic stripe card is a type of card capable of storing data by modifying the magnetism of iron-based magnetic particles on a band of magnetic material on the card. The magnetic stripe, also referred to herein as a mag stripe, is read by physical contact and swiping past a reading head.
Counterfeiting of payment cards has been a major problem in markets using magnetic stripe static security code authentication to process card present transactions. In several markets around the world, the problem has been addressed by adopting Europay, MasterCard and Visa (“EMV”) technology, which uses dynamic authentication. EMV technology is a global standard for inter-operation of chip cards.
Magnetic stripe cards are increasingly being replaced throughout the world by integrated circuit cards (IC cards or “chip cards”) that include EMV technology. The expression “EMV card” is used herein to describe chip cards that include EMV technology. Because counterfeiting of chip cards is difficult or virtually impossible, it is expected that the problem of credit card counterfeiting and debit card counterfeiting will diminish significantly as the global use of magnetic strip cards diminishes. However, it is anticipated that card counterfeiting will be replaced by other types of fraud, such as fraudulent card-not-present (“CNP”) transactions.